American exports to Kenya more than double to Sh137bn

Thursday, January 29, 2015 5:04

By NEVILLE OTUKI and GEORGE NGIGI |

Kenya Airways pilot Koki Mutungi and Alex Mbugua, the finance director, join traditional dancers in celebrating the arrival of the airline’s fourth Dreamliner at the JKIA in August last year. KQ's fleet modernisation plan was the key driver of the growth in Kenya’s trade with the US. PHOTO | FILE

Kenya’s imports from the US more than doubled last year, marking the fastest growth in trade with the world’s largest economy in Africa.

US exports to East Africa’s largest economy rose to $1.5 billion (Sh137.46 billion) from $594.5 million (Sh54.4 billion) the previous year — representing a 165.3 per cent growth, according to newly released data from the US Department of Commerce.

The growth, which was the highest among America’s top 10 trading partners in Africa, enabled Kenya to dislodge Ghana from position eight by value of imports.

The rapid growth of exports to Kenya is set to catch the eye of the world’s largest economy, which is aggressively expanding its commercial presence in Africa where China has become predominant.

The US Commercial Service, a trade promotion unit, said the growth reflects Kenya’s pace of expansion since the bulk of the imports were capital goods — machinery and equipment.

The promotion unit is being used to discover and exploit business opportunities for American companies in Kenya and other African nations.

Kenya Airways’ fleet modernisation plan was the key driver of the growth in Kenya’s trade with the US. The national carrier imported five Dreamliner jets from Seattle-based Boeing last year, earning it recognition by the American embassy in Nairobi.

The purchase of General Electric locomotives by Rift Valley Railways was also a factor.

Kenya Airways CEO Mbuvi Ngunze said the national carrier would continue buying engines from American technology giant, General Electric, in addition to other spare parts.

The list of companies feted by the US mission in Nairobi was largely made of agricultural and construction sector players.

Gicheha Farm, Oldonya Nairasha Estates, Olerai Farm and Sarpau Limited made the list as well as GET Properties, Monaco Engineering and Yashinoya Trading from the construction sector.

The Nairobi event was the first of its kind in Africa that signalled the embassy’s renewed focus on deepening America’s commercial ties with Kenya.

The feted firms are associated with the US Commercial Service whose membership comes with preferences such as faster visa processing and direct links with American producers.

Sammy Ng’ang’a, the managing director of Yashinoya Trading and Construction Company, said his company had imported US machinery worth more than Sh91.6 million ($1 million), including those to be used in developing geothermal wells.

“Apart from faster processing of visa, the US commercial service has been verifying for us manufacturers we end up engaging with,” said Mr Ng’ang’a.

The list of Kenya’s main imports from the US includes cereals, boilers, and sound and TV equipment.

The White House organised its first African-American summit last year, a move that was seen as driven by Washington’s realisation that it was missing out on Africa’s growth — having ceded ground to Asian giants such as China and Japan.

China started the African summit series in 2001 and has since grown its trade with Africa to $200 billion or more than double the US trade with the continent.

China overtook India to become Kenya’s top source of imports last September, having increased the value of exports to the East African nation by 37.9 per cent to Sh178 billion. The value of US exports to Kenya grew 168 per cent over the same period to Sh120.4 billion.

Analysts said America could stop China’s rapid expansion in Africa if it changed its attitude and perception of African states.

“The main obstacle is that most western nations come with the attitude of being master states that deserve an easy ride. When people react negatively to that attitude they lose and there is increasing objection by African states to such attitudes,” Macharia Munene, a professor of international relations at the United States International University in Africa (USIU).

Prof Munene reckons that American companies do not have to loosen their corporate governance requirements to succeed in Africa where business transactions especially with the government are mired in corruption.

“All they need to do is to connect better with the communities and demonstrate how all sides are winning,” he said.

The US has in the past decade used initiatives such as the Africa Growth and Opportunity Act (Agoa) to boost its commercial relations with Africa.

Last year Kenya’s exports to the US grew by 26 per cent to Sh47.3 billion ($520 million), only second to Cote d’Ivoire’s 32 per cent growth.

Wide trade deficits with China, which is a low consumer of Kenya’s products, has recently dominated commercial relations between Beijing and Nairobi.

Moses Ikiara, the chief executive of Kenya Investment Authority, said Americans were planning a US-Kenya summit to be held in Nairobi this year, offering their businesses a platform to showcase their products and scout for opportunities in the country.

Kenya, being a growing economy, is expected to continue importing increasing amounts of capital and intermediary goods to support production — a space that should interest American companies.

“Kenyans also love imported products and the middle class is growing so the purchasing power is there, especially for quality goods,” said Dr Ikiara.

The growing business interest has helped improve political relations between the two countries that began on sour terms with the election of Uhuru Kenyatta, who was facing a case at the International Criminal Court, as president.

The case against President Kenyatta has since been withdrawn, opening the door for closer diplomatic interaction between the two nations. Kenya is also seen as a key ally to the US in the fight against terrorism.